Client Alert: Executive Order Expanding Investment Choices for 401(k) Plans

August 11, 2025  

On August 7, 2025, President Trump issued an Executive Order, Expanding Investment Choices for 401(k) Plans, which may have a profound impact on the multi-trillion-dollar U.S. retirement market. The Executive Order is aimed at providing 401(k) investors access to alternative assets for better returns and diversification. This Order presents abundant opportunities, but it also raises questions for various stakeholders:

• For investors, private equity firms, and issuers of alternative investments: How can we best take advantage of this new opportunity?
• For investment managers and advisors: how does this Executive Order fit within our existing regulatory and fiduciary obligations?

In this ever-changing regulatory landscape, Croke Fairchild is here to help.

Private market investments account for an increasingly substantial portion of the overall capital market. The number of IPOs has fallen over the past five years. In the same period, private equity investment has grown substantially, and digital asset offerings have expanded. But private market investments, such as private equity, alternative investments, and digital assets, have historically been excluded from defined-contribution plans such as 401(k)s.

Prior to the recent Executive Order, the regulatory landscape in this area has been uncertain. In 2020, the Department of Labor (“DOL”) issued an opinion letter stating that private market investments could be included in a qualified plan, as part of either a target-date fund or another managed solution. In 2021, the DOL issued a Supplemental Statement urging caution and warning that certain fiduciaries may not have the expertise necessary to evaluate private equity investments. More recently, several officials in the new administration have advocated for democratized access to the private markets. In addition, the current administration has promised to make the U.S. the crypto capital of the world, in part by embracing a regulatory landscape more friendly to digital assets.

Many players in the financial services sector for years have been seeking channels to distribute private and other alternative assets to the broader, non-institutional market, for example, through interval funds registered under the Investment Company Act and novel ETFs. The Executive Order is likely to accelerate, and diversify, this trend.

The August 7th Executive Order tasks several government agencies, including the Department of Labor, Treasury, and the Securities and Exchange Commission, with issuing, clarifying, and/or revising guidance and regulations related to defined contribution retirement plans in order to facilitate the inclusion of alternative assets, such as private equity, real estate, and digital assets.

Fees and costs: Many private market investments come with higher expenses. While those expenses are often balanced by higher potential rewards, asset managers and advisors must implement appropriate policies and procedures to weigh those costs and benefits, and they must appropriately document their analysis.
Complexity: Private equity, digital assets, and alternative investments are more complex than traditional equity investments. For asset managers and advisors evaluating the suitability of these investments, new training and education programs may be warranted.
Transparency: Investment advisors serving retirement plans have fiduciary responsibilities when selecting and monitoring investments. Private equity firms, digital asset platforms, and issuers of alternative investments can make their offerings more appealing to these highly regulated entities with clear and robust disclosures.
Litigation Risk: Given the changing regulatory landscape, we can expect litigation if a private equity or alternative investment within a defined-contribution plan performs poorly. Advisors and offerors alike should ensure they have robust and well documented policies and procedures.

If you would like more insights into this Executive Order and how it may impact your business, please reach out to: David Skelding, Michael Frisch, or Ariella Guardi.

David Skelding
Partner, Chicago
Direct: 708-275-9339
dskelding@crokefairchild.com

Michael Frisch
Partner, Chicago
Direct: 847-530-7419
mfrisch@crokefairchild.com

Ariella Guardi
Partner, Chicago
Direct: 872-224-2922
aguardi@crokefairchild.com